June 19, 2019

Phone Consultations

Thank you for contacting me with regard to your student loan questions. Because of some changes in the student loan law landscape, I have changed how I offer my services.

The good news for you is that in many cases, modifying your student loan payment terms has become a good bit easier. If your loans are government issued or guaranteed, the income based repayment programs have been expanded and, perhaps equally important, the Department of Education website has become much easier to navigate.

If your student loans were issued by private banks, you still do not have a lot of options, but I intend to cover in the paragraphs below the few options that you do still have.

Now, about the change in my law practice. I am still available to answer questions, offer legal advice or help you implement a plan to get your student loan debt under control. However, I can no longer offer free consultations.

I am sure you can understand that running a law practice is a business and I can’t stay in business if I spend my day offering free advice to folks who do not hire me. My experience has been that most of the time folks like you who are researching student loan debt on the Internet are smart enough to understand the (vastly improved) Department of Education web site.

So, in the paragraphs that follow I am going to provide to you at no cost most of what I have been offering potential clients in formerly free consultations. Not surprisingly this free information comes with a disclaimer: the information that follows does not constitute legal advice nor does it create an attorney-client relationship. If you need advice specific to your situation you should retain a lawyer. Finally, the laws related to student loan debt change from time to time and you should not assume that anything you read on the Internet is totally accurate or up to date.

What follows will be an overview of how I see the student loan debt resolution process, including a number of free resources you can use to better understand your options. If you get confused, need a more detailed explanation about any step in the process or if you need legal advice, you can contact me. My current rates are as follows:

Step One – Information Gathering

Before you can hope to resolve your student loan debt problem you need to know what you owe and to whom. If you have not already done so, you should set up a file where you keep bills, documentation and collection letters.

Next you should look for information about your student loans in two places:

1. The NSLDS web site – https://www.nslds.ed.gov/npas/index.htm
2. Your credit reports – https://www.annualcreditreport.com

The NSLDS site will provide you with a list of all government issued or government guaranteed loans and their payment status. Private student loans do not appear on your NSLDS.

Your credit reports should provide you with information about both government and private student loans. My experience has been that 95% of the time, your student loan information will appear at one or both of these places. Yes, there are exceptions – that’s where you rely on your memory, your gut and, of course, your student loan file.

Step Two – Dealing with Government Student Loans

If you owe on government issued or guaranteed student loans, your next stop should be the Department of Education web site, which you can find here: https://www2.ed.gov/fund/grants-college.html

As of 2019 this page displays 2 columns – “I’m Looking for a Loan” and “I already have a loan.” Under the I already have a loan column there are 8 choices relating to repayment, consolidation, curing default, cancellation of certain loans and deferment.

Most of the folks I speak with are interested in the Income Based Repayment plans. If you click on the IBR section you will find a wealth of information about how the IBR programs work.

The Department of Education also offers a very helpful “Repayment Estimator” – which you can find here: https://studentloans.gov/myDirectLoan/mobile/repayment/repaymentEstimator.action

The estimator will prompt you to log in to your NSLDS account and it will pull your actual loan information. Further, the estimator will only allow you to choose repayment options that are actually available. The estimator will calculate and display your various options, and once you choose an option, the system will walk you through filling out the paperwork.

Once you complete and submit the paperwork you need to make the payments and update the Department of Education annually (usually) about your income.

The Bankruptcy Option

The United States Bankruptcy Code says that Department of Education issued student loans cannot be discharged in bankruptcy unless not doing so would create an “undue hardship” for the debtor and his/her family.

As discussed elsewhere on this website, the Brunner case defines undue hardship in most federal judicial circuits and it imposes very strict limitations on what you need to assert undue hardship.

In recent years, however, some bankruptcy judges in some jurisdictions have been backing off Brunner to some degree by agreeing to discharge a percentage of the government student loan.  There are not a lot of reported cases because most people filing bankruptcy don’t have the money to litigate this issue.  However, the trend is clearly in the direction of a liberalization of the discharge standard.

Step Three – Dealing with Private Student Loans

As discussed on my website, there is no equivalent in the private student loan world to the income based repayment programs that are available for Department of Education loans.

However, you may have an argument that some or all of your private student loans are dischargeable in bankruptcy, and here’s why:

Bankruptcy Code Section 523(a)(8) reads as follows:

A discharge under Chapter 7 or Chapter 13 does not discharge an individual debtor from any debt…

(8) unless excepting such debt from discharge under this paragraph would impose an undue hardship on the debtor and the debtor’s dependents, for

(A)

(i)  an educational benefit overpayment or loan made, insured, or guaranteed by a governmental unit, or made under any program funded in whole or in part by a governmental unit or nonprofit institution; or

(ii) an obligation to repay funds received as an educational benefit, scholarship, or stipend; or
(B)

any other educational loan that is a qualified education loan, as defined in section 221(d)(1) of the Internal Revenue Code of 1986, incurred by a debtor who is an individual;
I read Part A as referring to government loans issued by the Department of Education.
I read Part B as referring to private student loans.

Why Some Private Student Loans May Not be Student Loans at All

Part B excepts from discharge an educational loan that is a qualified education loan as defined in the IRS Code at Section 221(d)(1).
If we look at Section 221(d)(1) we see the following definition:
The term “qualified education loan” means in indebtedness incurred by the taxpayer solely to pay qualified higher education expenses.
Based on these definitions, the following questions arise:
  1. What if the debtor student was not a taxpayer at the time he/she incurred the private student loan?
  2. What if the private student loan amount was for more than the cost of education?
A number of bankruptcy judges have accepted these arguments to find that some private student loans should not be treated as student loans for bankruptcy purposes.  An example of one of these court decisions is the Dufrane case, which you can read by clicking here.

The Refinance Option for Private Student Loans

Another option for private student loan debtors is refinance.

There companies out there that offer refinancing options. A helpful website to visit is https://studentloanhero.com. You can also Google “private student loan refinance” for other options, but be careful to avoid scams.

You can use the bankruptcy process to delay collection, and in very limited cases, wipe out private student loans. Bankruptcy can also be helpful in eliminating other debts and providing for the surrender of homes or cars so that you have the money to pay your private student loans. I have been a personal bankruptcy lawyer for over 30 years and I can tell you that student loans are a leading cause of personal bankruptcy.

You can try to work out a repayment plan with your private student loan lender. I rarely see this work but as private student loan lenders come under more political pressure they may begin to loosen the reins a little.

If I had to guess, I would say that there is some chance that Congress will address private student loan debt. In what form and when, I can’t say but it would be wise to keep an eye out for changes.

Step Four – Related Remedies

Anyone who has ever dealt with bill collectors knows what it is like to be harassed for payment. In the case of student loan debt bill collectors can be especially nasty because they know that student loan debt generally cannot be discharged in bankruptcy and that many borrowers do not know about all of their repayment options.

Third party debt collectors are subject to the rules set out in the federal Fair Debt Collection Practices Act and if a collector violates the FDCPA rules you may have a claim for damages against that collector.

Often the best evidence of harassment arises from phone conversations so whenever possible I recommend that student loan debtors record their conversations with debt collectors – student loan or otherwise. Every state has different rules about recording phone calls – some states only require one party (i.e., you) to consent to the recording, while other states require you to get prior verbal permission to record calls.

Many smart phones allow for recording of calls, or you can pick up an inexpensive digital records and earphone microphone.

Learn more about FDCPA violations on my website https://www.fdcpahelp.com.

You also may have a cause of action against your student loan servicing agency for improper reporting on your credit report (a Fair Credit Reporting Act) claim.

When to Hire a Lawyer

I hope that the above information will help you navigate the sometimes troubled waters of student loan debt management and payments. If you are overwhelmed and need to buy a little of my time to clarify what options are out there, to ask for advice about how to proceed, or for help putting a repayment plan into place, please let me know. You can email me directly here. I accept PayPal or credit card payments through PayPal.

However you decide to proceed, I wish you the best of luck and best of success in resolving your student loan issues.

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Jonathan Ginsberg

Jonathan Ginsberg has served the Atlanta area community as a personal bankruptcy and student loan debt management lawyer for over 25 years. Contact Jonathan for straight answers to difficult debt problems.